Consider a market consisting of two farms producing same quality of rice. The market demand curve and the market supply curve for rice are given by: qD = 250 – p for 0 ? p ? 250 = 0 for p > 250 qS = 150 + p for p ?10 = 0 for 0 ?p < 10 What will be equilibrium price?

100 50 80 70

50

Since at equilibrium price market clears, we find the equilibrium price by equating market demand and supply and solve for p. 250-p = 150+ p 100 = 2p 50 = p